As the Class of 2025 searches for jobs, economics professors weigh in on the current job market

As members of the Class of 2025 move through the job search process, some may worry about the poor job market with high unemployment and slow hiring. Although some do blocked return offers on summer internships, others are just starting their search.

According to Reuters, the unemployment rate in the United States reached its highest level since the pandemic in July, 4.3%, with a significant slowdown in employment. The sharp rise in unemployment has prompted the introduction of the Sahm Rule, which states that an increase in the average unemployment rate of more than 0.5% over a three-month period can be an early indicator of a recession.

The Dartmouth interviewed six economics professors to better understand the realities of the current job market and asked whether today’s seniors have reason to panic. According to senior economics lecturer Elisabeth Curtis, the current situation may be an “exception” to the rule.

“I can say with a high degree of confidence that we are not… in a recession right now,” Curtis said.

Curtis explained that unemployment rates are rising from “historically low” levels during the pandemic, which provides necessary context that the Sahm Rule does not account for.

“The small increase in unemployment at this time is not unexpected and can be partly explained by some weak hiring trends in some sectors,” she said. “At the same time, this may be supported by the more positive side of more people entering the labor market.”

Curtis added that some sectors of the labor market are changing their hiring practices, which may partly explain unemployment rates. The technology industry, for example, slowed hiring after extensive hiring in 2020-2023, she added.

“We had a big tech boom (during Covid-19) and everyone decided to get some tech skills,” Curtis said. “Now so much of the hiring has been done that the industry is not as robust in hiring.”

While the impact of the Covid-19 pandemic is becoming increasingly marginal, the pandemic continues to cause “lasting shocks to the labor market,” economics professor John Welborn wrote in an email statement to The Dartmouth. For example, many experienced workers chose to leave their jobs “instead of taking a leave of absence,” while many baby boomers used the pandemic as an opportunity to retire.

Despite these instabilities, the value and prestige of a Dartmouth degree continues to be an advantage in the job search, even during an economic downturn, according to economics professor Paul Novosad.

“I think most (Dartmouth) students vastly underestimate the opportunities available to them and how much they will be valued in the job market,” Novosad wrote in an email statement to The Dartmouth.

Economics professor Bruce Sacerdote added that Dartmouth graduates “do exceptionally well in any sector,” although they may have to “work a little harder to land the first job of their choice” in a slower job market.

Dartmouth’s alumni network is also a “valuable” resource for students looking for jobs, Welborn wrote.

“Dartmouth students are talented thinkers, writers and networkers,” Welborn wrote. “I believe that successful students see themselves as bundles of human capital ready to be deployed.”

In an effort to fulfill its dual mandate of maximizing employment and stabilizing prices, the Federal Reserve announced an interest rate cut on September 18. Welborn is hopeful about the impact of the cuts because lower interest rates “historically” have been helpful to “maximize employment.”

“Lower rates are intended to lower borrowing costs and thereby encourage new business activity and employment,” Welborn wrote.

According to economics professor Diego Comin, interest rates have been “very high” over the past few years. As inflation approaches normal, “there is absolutely no reason to keep interest rates at these levels,” Comin said.

Economics professor Patricia Anderson compared the Federal Reserve’s control over interest rates to “trying to land a plane.” She explained that past attempts to manage inflation caused the market to crash.

“Maybe I’m being unabashedly optimistic, but I feel like they’re doing it,” Anderson said. “(The unemployment rate) is rising, but it’s only (4.1)%. All these years, people could only dream about it.

While the statistics may be alarming, economics professors are ultimately optimistic about the employment prospects of the Class of 2025.